ECONOMIC DEMOCRACY

GIVING LABOR A VOICE IN COMPANY MANAGEMENT

THE HUGE SUCCESS OF THE GERMAN ECONOMIC
MODEL

Codetermination is a policy that gives workers a voice in the
management of the company they work for. It is commonly found in
coordinated market economies such as Germany, and a majority of the 28
state members of the EU plus Norway provide for some level of employee
representation at the board level. Liberal market economies such as the
United States, however, do not require this.

To those who would try to argue against this, we will point out that Germany is a smashing economic success.
In terms of real GDP per capita average growth, they are one of the
strongest economies in the world. And between 2007-2016, they had more
GDP growth than the United States. So it seems that their policies
supportive to labor, with high-cost workers have actually been quite
successful. (Quartz)

Germany has had a strong history of support for workers rights, and
the rights of the worker to express themselves at the management level.
The modern German law on codetermination is found in the
Mitbestimmungsgesetz of 1976. This law allows workers to elect
representatives (usually trade union representatives) for almost half of
the supervisory board of directors. It applies to public and private
companies as long as there are over 2000 employees. For companies with
500-2000 employees, one third of the supervisory board must be elected.
This means that workers get to have a say in the organization of a
business, the conditions of the work, and the management of personal and
economic decisions affecting their future.

There is also legislation in Germany, known as the
Betriebsverfassungsgesetz, whereby workers are entitled to form Works
Councils at the local shop floor level.

Today's German codetermination laws originated from the 1920 German
"Works Council Act." And the Weimar Constitution after World War I said,
"Works and staff are appointed to participate with equal rights
together with the company in the regulation of wages and working
conditions, as well as in the complete economic development of the
producing powers." The first codetermination law was even passed in
1848, in which the Frankfurt Parliament processed a minority proposal
for industry organization that included boundaries for corporate power
by setting up work councils.

Today, codetermination laws are beneficial for both workers and
employers. They can help a company to re-orient their goals to the
interest of the worker, and make sure company interests are not
one-sided. And for employers, such agreements can help to maximize the
productivity of the worker.

For more information on codetermination, and the involvement of workers in company management, read the links below.

Mitbestimmungsgesetz (in English, Codetermination Act)
of 1976 is a German law which requires companies of over 2000 employees
to have half the supervisory board of directors as representatives of
workers.